It is always a challenge for leaders to determine which dragon needs to be slayed. In the case of new Best Buy CEO Hubert Joly, there are plenty to chose from. Weakening electronics demand especially in China, the abrupt departure of former CEO Brian Dunn in the wake of ethics charges, a business model that makes Best Buy (BBY) a showroom for internet providers, a take over bid from founder Richard Schulze and a market that has no patience for earnings all create an environment where a lot is expected fast from the new boss. His first move? Suspend profit outlooks and share buybacks for the remainder of the year.
Of course the market is “disappointed,” but here Joly got it right. Until he has a handle on the situation, continuing to provide guidance without sound data to back it up would only create greater pressure and scrutiny of the embattled company and it’s new CEO. It would also box him in as his options for fighting all of the other demons would be in the context of pre-announced profit outlooks. Bowing to the pressures of the analysts would only make Joly’s job even more difficult.
Joly brings a great deal of experience dealing with the public pressure. Once a consultant and then partner with McKinsey and Company he’s been an executive at EDS, then EDS France, then Vivendi Universal where was Executive Vice-President. Under his later leadership at Carlson Wagonlit Travel, Joly turned around the faltering travel company, raising profits from almost 9 billion USD to over 25 billion in four years.
There’s no guarantee that Joly will be successful in revamping the culture of Best Buy and revising a business model best suited for last century. But the second guessing by analysts and the marketplace in general about whether Best Buy will “meet it’s numbers” is only a distraction. Many CEOs seem to prioritize satisfying the market in a short-term way as their number one objective. Joly understands that this is ultimately not in the best interest of any of Best Buy’s stakeholders. Shareholders have taken a beating with Best Buy over the last few months and deserve a more considered strategy. I believe Joly might be the one to give it to them.